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City statement on Hirschfeld lawsuit
The City of San Angelo and the City of San Angelo Development Corp., which administers the half-cent sales tax for economic development, have brought suit against Martifer-Hirschfeld Energy Systems to recover more than $2.6 million in funds entrusted to us by our taxpayers. Those funds were advanced to the company as part of two economic development agreements executed between Martifer-Hirschfeld, the COSADC and the City in 2009 and 2010. In those contracts, Martifer-Hirschfeld committed itself to investing $40 million into its wind energy plant in San Angelo, creating 225 full-time jobs for local and area residents, and operating the plant continuously for 10 years. By its own admission in court filings, the company failed to meet its contractual obligations.
Before filing suit, the City and the COSADC worked patiently and tirelessly to resolve the matter. However, Martifer-Hirschfeld never offered to repay more than a slim fraction of the millions it received. The City and the COSADC could not agree to a minimal repayment. Doing so – and allowing Martifer-Hirschfeld to walk away with millions in taxpayer dollars – would constitute a serious breach of the public trust. Further, it would set a dangerous precedent for other economic development agreements with the City and COSADC to be non-binding when there is a failure to meet contractual obligations.
Because Martifer-Hirschfeld clearly received the public funds and has confessed in court documents that it failed to live up to its contractual obligations with the City, we have filed a motion for summary judgment. That motion will be heard in the 119th State District Court on March 2. We are disappointed with Hirschfeld Industries’ recent public statement, which disingenuously blamed the City and the COSADC for decisions to expand operations in Abilene rather than in San Angelo. At the heart of this case is Martifer-Hirschfeld's failure to invest in its local plant and to create jobs in San Angelo; now Hirschfeld is doing just that in another West Texas city. We have, in good faith, repeatedly invited the company to bring us a specific proposal to evaluate so we could jointly resolve this matter. Martifer-Hirschfeld has never done so. Negotiating with the private equity hedge fund that today controls Hirschfeld is more challenging than partnering with local ownership with whom the City has had close personal and working relationships for decades. Despite that, we remain committed to forging a resolution that could well serve all involved, our community and its citizens included.